The R&D World Index (RDWI) for the week ending October 7, 2022, closed at 2,202.95 for the 25 companies in the RDWI. The Index was up 0.97% (or 21.25 basis points) from the week ending September 30, 2022. Eighteen of the 25 RDWI members gained value during the past week from 0.01% (IBM) to 8.93% (Ford Motor Co.). Six of the 25 RDWI members lost value last week from -0.19% (Intel) to -3.29% (Pfizer). One of the 25 RDWI members had no change (Roche Holdings AG at 40.62).

Semiconductor memory chip makers Micron Technology Inc., Boise, Idaho, and Samsung Electronics Co., Suwon, South Korea, have recently issued downgraded forecasts and profit estimates, due to dramatically reduced global demand. Analysts don’t expect these downgrades to moderate until the middle of 2023. Samsung forecasted last week a 32% drop in operating profits for 3Q 2022, far worse than analysts’ expectations. Despite these current economic fluctuations, Micron last week announced that it will invest up to $100 billion to build a semiconductor manufacturing complex in upstate Clay, New York. The first production facilities are expected to be completed by the end of this decade.

Advanced Micro Devices (AMD), Austin, Texas, mirrored the Micron and Samsung news when it cut its revenue forecast for 3Q 2022 by about 15% last week, citing lower-than-expected demand for its semiconductor chips. PC and electronics demand are experiencing some of their steepest declines in years after elevated pandemic-related sales were followed by a slowdown in consumer spending on electronics.

The state of Michigan last week approved a $200 million grant to Our Next Energy Inc. (ONE), Novi, Michigan, for its $1.6 billion battery production plant to be built in Van Buren Township, Michigan, near Detroit. The plant promises to create more than 2,000 new jobs and annually produce enough battery cells for about 200,000 electric vehicles (EVs). The plant is expected to produce batteries based on lithium iron phosphate, which is less volatile than the currently used lithium-ion cells. ONE expects to produce battery packs with 600-mile range and at about half the cost of current EV batteries. The company did not identify specific customers for its batteries. ONE is being run by the former leaders of Apple Inc.’s secretive car project.

The U.S. Department of Defense last week announced it will be using a Boeing MQ-28 Ghost Bat drone for R&D purposes in cooperation with the U.S. Air Force. The MQ-28 is an advanced uncrewed drone designed, developed and produced by Boeing’s division in Australia. The USAF and the Royal Australian Air Force have signed an agreement for joint development between the two services. The announcement did not mention how the MQ-28 would be used by the two services.

The U.S. Government Accountability Office (GAO) last week found that U.S. government agencies had sent more than $28 million to Chinese entities for R&D between 2015 and 2021. The study, which was requested by bilateral U.S. House of Representatives, noted that the Centers for Disease Control and Prevention (CDC), the Department of Defense (DOD) and the National Institutes of Health (NIH) provided the research funds directly to the Chinese entities for 22 specific projects. The Chinese entities included universities and other research institutions. The research projects focused on multiple scientific disciplines, including public health and biological sciences.

Form Energy Inc., Somerville, Massachusetts, announced last week that it had raised $450 million to develop iron-air batteries which could store renewable energy for several days. The development is focused on addressing the intermittency of wind and solar power. Current lithium-ion battery technology is considered too costly for this application and can only store energy for hours. Investors in Form Energy include Canada’s Pension Plan, Bill Gates’s Breakthrough Energy Ventures and Singapore’s GIC Pte. Ltd. The company is considering several U.S. manufacturing sites with a startup commercial date of late 2024.

In September, General Atomics, San Diego, announced that it received a contract from the U.S. Navy to continue its development and evaluation of its Electromagnetic Aircraft Launch System and Advanced Arresting Gear in preparation for their potential sale to France for installation in that country’s new nuclear-powered aircraft carrier project known as Porte-Avions de Nouvelle Generation (PANG). This system is installed on the U.S.S. Gerald R. Ford aircraft carrier (and planned for future Ford-class carriers) currently deployed in the Atlantic Ocean. France’s new generation aircraft carrier would replace its current nuclear-power Charles de Gaulle aircraft carrier in 2038.

The U.S. last week imposed new export restrictions on advanced semiconductors and chip-manufacturing equipment in effort to prevent American technology from advancing China’s military power. The new rules will require U.S. chip makers to obtain a license from the U.S. Department of Commerce to export certain chips used in advanced artificial intelligence (AI) calculations and supercomputing. The rules will also allow the U.S. to block foreign-made chips that are manufactured with U.S. technology. U.S. regulators are working with countries aligned with the U.S. to convince them to create similar restrictions on their in-house technologies.

Large technology companies, including many RDW Index members such as Microsoft, Redmond, Washington, Google parent Alphabet, Mountain View, California, and Facebook/Meta Platforms, Menlo Park, California, generate more than 50% of their revenue outside of the U.S. These companies are particularly vulnerable to the current surging U.S. dollar. When the dollar strengthens, sales that companies earn in non-dollar currencies are worth less, which can cut millions of dollars off those companies’ earnings. In the past, the overall growing economy was enough to offset the losses from a strong dollar. The current slowing global economies and the overall large scale of the dollar’s strength, which is up 16% for the year so far, has hurt technology stocks more than in the past.

 

R&D World’s R&D Index is a weekly stock market summary of the top international companies involved in R&D. The top 25 industrial R&D spenders in 2020 were selected based on the latest listings from Schonfeld & Associates’ June 2020 R&D Ratios & Budgets. These 25 companies include pharmaceutical (10 companies), automotive (6 companies) and ICT (9 companies), which invested a cumulative total of nearly 260 billion dollars in R&D in 2019, or approximately 10% of all the R&D spent in the world by government, industries and academia combined, according to R&D World’s 2021 Global R&D Funding Forecast. The stock prices used in the R&D World Index are tabulated from NASDAQ, NYSE and OTC common stock prices for the companies selected at the close of stock trading business on the Friday preceding the online publication of the R&D World Index.